Spot gold slipped 1.2% to settle at $4,298.80/oz, while gold futures declined 1.6% to settle at $4,340.00/oz

Gold prices slipped on Monday, weighed down by the dollar hitting a near two-week high and elevated oil prices. Precious metal market participants are focused on the U.S. central bank’s interest rate decision later this week, where the central bank is expected to deliver a hike for the first time in over three years.

Spot gold slipped 1.2% to settle at $4,298.80/oz, while gold futures declined 1.6% to settle at $4,340.00/oz.

Gold has traded in a relatively narrow range near $4,400 since rebounding from a floor around $4,000 in July, as investors have repeatedly reassessed the outlook for U.S. central bank policy.

ANZ said it expects escalating Middle East tensions and higher energy prices to drive inflation higher and forecasts three 25-basis point central bank rate hikes by March 2027. However, ANZ said those inflation pressures are being driven by geopolitical disruptions, which it believes should preserve gold’s safe haven appeal.

Chart-wise, gold looks as if it could be forming the right-hand side of a ‘head-and-shoulders’ pattern which, should it complete, could see prices head back down towards $4,000 per ounce, David Morrison, senior market analyst at Trade Nation, said.

But head-and-shoulders can be unreliable, so it would be dangerous to ascribe too much weight to one pattern. Despite this, the daily MACD suggests that momentum is building to the downside, so a retest of support around $4.200 can’t be ruled out, he said.

It’s worth noting that the Fed’s FOMC will announce its latest rate decision on Wednesday, and that has the potential to shake things up, leading to a big move in either direction, Morrison added.